16 responses to “How many additional (unbudgeted) dollars will be needed from DCC to get the stadium ready for RWC 2011?”

Do you mean unbudgeted in addition to the $400,000 announced around the 20th of last month? You may have seen my letter asking what that $400,000 was for & DVML’s response in this morning’s ODT. Because I couldn’t understand Mr Davies’ reply I wrote seeking clarification and was told by Jo Scully, “I don’t believe Dunedin Venues holds this information.”

When Mr Davies sought the additional $400,000 he must have had some idea of what it was for (- more than some, we would all hope); if he doesn’t know now, is it because the cost has escalated 10-fold and it’s no longer possible to identify a mere $400,000 of it?

I’ve just reread my correspondence with Ms Scully and Mr Davies and noticed not only his obfuscations but also that his reply to my letter to the ODT took more than 3 weeks coming; hence I think that there must be a very large elephant in the room being studiously circumvented.

My guess is that the DCC has been asked for an additional $4 or $5 million. Am I close? Do you know more? And what is it really for? Is it for those pesky exclusions (- but surely they couldn’t have totalled millions)? Or has the guaranteed maximum price fallen short somewhere and the east & west stands can’t be completed without an injection of more city money?

Rather than put the frighteners on us all for another $400,000 to $5m, DV can use Carisbrook for the RWC; but 22,000 seats have apparently been sold to real live punters who want to see Elton John – can DV use Carisbrook for the concert if the stadium isn’t completed?

Jeepers ro, THAT much, of NEW money to the stadium ?????
Maybe our readers can do some itemising in support.

In offline discussion recently there was wonderment (not in a good way) around what the cost of landscaping the stadium precinct might balloon at… but yes, add every other exclusion, plus the $400,000 already acknowledged by DD – so do we get to $5- or $6 million??? Are we being inflationary, like the stadium spend isn’t.

I thought landscaping the plaza was the University’s contribution – around $250,000 was budgeted by them for it? How much can you spend on a few trees and some asphalt?

I find it very hard to believe that ordinary departments of the DCC could disguise a request for millions of dollars… even broken up as a few hundred thousand apiece. Delta has owned to doing some work on a commercial basis for the stadium – could Delta disguise a raid of that size?

My question has been handed to the city as a request under the Official Information Act. And it is outrageous that Ms Scully believes this information is unknown to DV, DVL, DVML. I have just been to see “Fair Game” and feel as Joe Wilson felt and Valerie Plame came to feel, about the subversion of the truth, and the race to divert attention from it, in order to railroad through the dream of a wilfully-blind, little, but powerful, man.

ro, I was thinking the wider stadium precinct rather than the plaza as such (who knows what can happen with Anzac Ave beautification, thrown in as a distraction).

But wasn’t there some sort of argument over the plaza, and who paid what – maybe that got settled and I missed the happy conclusion.

The whole stadium cost is completely at sea in the public mind – we know less than we did three years ago, at the same time there have been more people compromising themselves in the pie.

But we’re likely brinking or spilling over our worst estimates of cost made following DCC’s receipt of peer reviews from Horwath and PWC and all subsequent Project Delivery Team reports. Rippled by the seat/package selling ledgers.

### ODT Tue, 15 Feb 2011 (page 8)
Letter to the editorDVML aware of stadium obligations
You have reported that hosting the three RWC matches at the new stadium will cost the city $400,000; do you have the breakdown for this figure – apart from extra toilets and a 300% increase in the cost of security? Is it, perhaps, something like: kitchen fitout: $200,000; electronic scoreboard: $?0,000; hire and installation of 13,000 movable seats: $?00,000; electronic turnstiles: $?0,000? Could you find out if any of these are what has caused hosting the matches at the new stadium to cost eight times the estimate for hosting them at Carisbrook?

If any of these (the excluded items that were meant to be funded either by the hirer of the venue or by the picker-up of the catering contract) is part of the blow-out then it is time to transfer the venue back to Carisbrook.

Rosemary McQueen, Dunedin

[David Davies, chief executive, Dunedin Venues Management Ltd, replies: “DVML recognise the concern within your correspondent’s letter, however, the contract was entered into a couple of years ago and we are unable to comment on the basis of understanding that the parties had at the time. However, DVML is aware of the obligations it has placed on it and will work within them. Moreover, the writer is assured the company will work ceaselessly to contain costs over the period of RWC 2011’s use of the stadium, and will keep these costs to a minimum without affecting the customer experience.”]

While I certainly can’t comment about most of this, I believe that at least one of the ‘excluded’ items is a red herring: the turnstiles. Most modern facilities have no turnstiles, just folding tables for bag inspections, and some little electronic scanners. Nothing owned or integrated. In fact, pretty much the same technology as they use at the university oval for cricket. I wouldn’t be surprised if the DCC already own some scanners for use at other events, or if actually the ticketing company provide them in conjunction with tickets. Certainly I don’t see it as a $100,000 or even likely a $10,000 exclusion. Not in the same league as say, a kitchen.

It’s easy enough to play smoke and mirrors. It is possible that the extra money is required in order to complete the GMP works within the timeframe. Extra manhours, fast tracking of fabrication ahead of other contracts, and so forth. I realise that there is a liquidated damages clause within the GMP contract, but anyone who has ever dealt with such things will know that they are almost impossible to enforce. All the contractor needs to do is to cite the delays in the design of the steel roof structures, and absolute liability can no longer be established. So liquidated damages clauses aren’t worth the paper they are written on.

So, assuming the costs are for the GMP work, but you don’t want to be seen to be coming in over budget, all you do is to shift that cost onto other items of work that are not included within the GMP. Let’s say that the laying of the turf (not in the GMP) should cost $1 million (just guessing). You tell the turf contractor to invoice you for $2 million, and you channel that extra $1 million back into GMP work items. The work is done, but the contractor doesn’t invoice it as part of the GMP claim. Publicly, no-one knows what the turf work should have cost. So no-one is any the wiser. All they know is that the main contract came in on budget (ie, the GMP cap was not breached). Everyone gets their bonus and a seat in the Founders Box. It’s dead simple and happens all the time. In order to make up a shortfall in a fixed price contract, you pick it up on variations and extra work. That’s why it’s a real mugs game to try and screw a contractor down on price at the start. Sometimes things just cost what they cost.

I asked this question on the 20th of January. The answer came on the 15th of Feb.

“we are unable to comment on the basis of understanding that the parties had at the time” had me flummoxed. Does it mean…

a. the contract was signed a long time ago and we don’t know what was in it; or
b. what was in the contract is a secret and none of your business; or
c. yes; the extras are for the excluded items but I can’t say so because a number of people’s reputations hang on it.

Consequently I asked Mr Davies directly what did it mean, and if it meant the last to put dollar values on the items for me. The reply came from Jo Scully within a few hours. It was that my request was being treated as a request of the DCC not DV for official information and that Ms Scully believed the answer to my question was not held within Dunedin Venues.

Since the question to the ODT was “do you have the breakdown for this figure? [$400,000)]” and to Mr Davies was what did he mean and if he meant yes then please give me the breakdown, her answer is unbelievable. Of course DV has the breakdown and Mr Davies knows what he meant. She must be answering the implication that they were for the excluded items. But the excluded items have been public information since the DCC placed the peer reviews on their website, even though the publication of these bits of the reviews was accidental and subsequently suppressed. There is no call to treat a request for confirmation under the local body OIA.

However, by treating my request as a request of the DCC for official info, she answers the underlying question in the affirmative. And this is where my outrage boils over… For Mr Davies’ assurance that DVML is aware of the obligations it has placed on it and will work within them to have any substance at all, he must surely be prepared to tell us what we’re paying for!

And why did the ODT publish THIS letter (Phil Somerville was handling letters to the editor this week) under the heading “DVML aware of stadium obligations”. Is he underlining the irony?

Phil on another thread has estimated that the cost of opening the stadium are about $100,000 per event. If he’s right, then the $400,000 for the 3 RWC matches would cover little more than operational expenses. It is hard to understand Mr Davies’ reticence but all the same I think Phil may be right because I’ve just been looking again at the excluded items. Salutary reading. Here’s a sample:

I’ve selected here about half of those identified by Davis Langdon but they are the ones that will be necessary before the matches can be played and Elton can sing. And these are hardly achievable for $100,000. The infrastructure for sound & video alone would cost more than that. And we know that fitting out the kitchen (but not the bars or the corporate suites) alone will cost about $200,000.

I daresay DVML is scouring the earth for sponsors for these but let us hope (and urge councillors not to support such a request) that the citizens of Dunedin will not be expected to cough up for them.

Ooops. Several nought short (Horwath report):
“2.7 FIT-OUT CONTRIBUTION FROM CATERERS
The larger catering companies such as Delaware North, Spotless, and Compass will pay a contribution towards fit-out costs in order to secure exclusive catering contracts at major venues. The level of contribution that caterers are willing to pay is linked to the revenue earning capability of the venue. As outlined in our financial projections contained in Section 6, we anticipate that the venue could achieve total food and beverage revenues of approximately $34 million over the first fifteen years of operation.

“Based on our knowledge of recent market trends in event venue catering, we anticipate that a major catering company might pay a fit-out contribution of up to $2 – 2.5 million in order to secure the exclusive catering opportunity at the new Stadium. “

Page 12 of the Price Waterhouse Coopers report anticipates … “4.10 The stadium may receive venue hire for hosting Rugby World Cup matches. It will not receive any other revenue from the event…” Ho-ho. And…”4.11 The Forecasts assume that the stadium will host five RWC matches yielding a total venue hire fee of approximately $345,000.”

Well there we have it. At some stage the CST indicated that RWC would pay to hire the new stadium for RWC matches. At some stage a contract was signed (by the ?ORFU for the hire of ?Carisbrook) in which no rental was included and when the city bought Carisbrook, it must have bought its matches schedule. When estimates for the cost of hosting the games at Carisbrook were made ($50,000), they must have been made against an anticipated revenue of ca $350,000. Remove that revenue and the costs are ca $400,000 – ie the anticipated cost of holding them at the new stadium.

So what does all this mean? Well, the stadium is still short of essential items for holding the matches and concert and with no obvious source of funding them. Elizabeth, I think our initial thoughts about an unbudgeted $5m or so being needed before October is probably spot on. But a request for such a sizeable sum cannot be hidden. It is so time to canvass councillors to ensure that the money doesn’t come out of the citizens’ pockets.

That’s from the 2008 report ? A lot of promises were made by PWC back then. Based on limited, no, or mischievious, information. They probably should have asked the RWC people first if the stadiums were to be offered free of charge as part of the bid. I note they do try to cover themselves with the use of “may”. Ditto with the projected numbers of spectators for rugby matches. David Davies seems to be the sensible one in all of this. He’s figured out straight away that the numbers were rubbish. I read that they have revised their budget accordingly, down from the stargazing numbers. But I don’t recall seeing what that new budget says. I applaud Mr Davies for coming out publicly with bad news. That’s not a lot of fun, especially when you’ve come in once the damage has already been done. He doesn’t seem to be afraid to front up and get on with things. I don’t know the man at all, but he seems to be projecting an honest approach.

He’s right about the viewing numbers. The NZRFU have really shot themselves in the foot if their intention is to increase ground spectator numbers. Personally, I don’t think they give a toss about the grounds. In fact, the more people who subscribe to Sky, the more money the NZRFU can earn from television rights.

Any home match on a Saturday is always hit hard. The way it’s been up until now is that there are usually 2 matches in NZ, followed by one match in Australia, and then finished with one match in South Africa. Typically. That’s kick off times of 5pm, 7pm, 9pm, and 11pm. Roughly. The NZ games are always the first. So, if you’re a diehard rugby fan, you don’t have time to go to the ground to watch the match. If you do, then you’ll either miss the following match on tv, or miss both the match prior and the match after. So you stay at home and not miss a thing.

Mr Farry claims to have “telegraphed” at some stage during project development that no fee could be exacted for the use of the venue. Presumably he did so after this report was prepared which does assert that some of the CST’s projections (such as the 5 RWC games quoted above) are optimistic.

Optimistic ? You’re just being kind there. Negligent springs to mind. Closely followed by Arrogant and Ignorant. The stadiums were free of charge at the 2007 RWC. At the very least he should have asked what the government and the NZRFU had agreed to. But that wouldn’t be very Southern.

Rental income “may” be received and the “Forecasts assume” it will be $345,000. The word that springs to my mind begins with a ‘d’ and describes not just an attitude but a wilful and calculated action.

Go and see Fair Game – see Bush saying Saddam had received uranium from an African country and therefore we must go to war; see Condoleeza Rice saying he’d received tubes that could only be used for nuclear weaponry and therefore we must go to war. And thank providence that our particular bugbears are not great and powerful men and women whose deceptions can bring about global calamity.